Fair allocation of cost reductions for a scale-based product family in a hierarchically structured firm Online publication date: Wed, 19-Jul-2017
by David Mueller
International Journal of Product Development (IJPD), Vol. 22, No. 1, 2017
Abstract: Size ranges are a widespread type of product family design, which are used to combine high product variety and cost reductions. For the purposes of motivation and remuneration, these cost reductions should be shared in a fair way between the employees. The nature of cooperative cost reductions is super-additive - a fact which impedes a fair assignment. For this reason, the purpose of this paper is to present an approach for calculating and fairly allocating a cost reduction in a hierarchically structured firm. The process of designing and producing size ranges is modelled as a cost-reduction game within a hierarchically structured organisation. Assuming a hierarchical organisation, this study presents a mechanism which distributes this cost reduction across all contributing employees in the firm. The research shows that cost growth laws are suitable for calculating the costs of all members of a product family based on the basic draft using physical characteristics.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Product Development (IJPD):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook